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Saturday, November 23, 2013

China’s plenum: state control as usual

by Michael RobertsThe Chinese Communist party’s Third Plenum (http://wiki.china.org.cn/wiki/index.php/Third_Plenum)
finished last week and the detailed statement on what it agreed to do
about China over the next five to ten years was released (http://chinacopyrightandmedia.wordpress.com/2013/11/15/ccp-central-committee-resolution-concerning-some-major-issues-in-comprehensively-deepening-reform/).There is been much talk about ‘reform’ in the bourgeois media leading
up to the Third Plenum. And the initial reaction of the strategists of
capital to the Plenum decisions was favourable. It looked like the
Chinese leaders were aiming to extend the role of capitalist markets and
production in the Chinese economy. The Chinese stock market rose.But, in my view, the third plenum did not really commit to anything
like ‘free market’ capitalism. At best, it agreed to a few limited
steps towards the development of market forces in banking (more
competition for the state-owned banks) and in agriculture (some
commercial property transactions), vague talk about ‘liberalisation’ of
capital controls and currency trading down the road; a few more ‘free
trade zones’ for foreign companies to ply their trade; and allowing
foreign companies to operate in more service sectors. And of course,
there is going to be a very limited relaxation of the terrible one-child
policy for families (‘only-child’ parents can now have more than one
child) and the control of the movement from rural areas of people into
the cities (hukou) by allowing more fee movement into smaller cities.But that is it. Two things stood out that did not happen. There is
no change in the general philosophy of ‘socialism with Chinese
characteristics’ and thus the maintenance of the dominance of the state
sector. As I argued in my previous long post on the nature of the
Chinese economy (http://thenextrecession.wordpress.com/2012/03/23/which-way-for-china-part-two/),
the pro-capitalist elements in the Chinese elite have pushed for the
implementation of the proposals in the large World Bank report on
China. The bank’s first and foremost demand for ‘reform’ was the
privatisation of the state enterprises. The third plenum has made no
move in that direction whatsoever. The other clear message was that
there would be no move towards any more ‘democracy’ or control of even
local legal systems and decisions by the people. On the contrary, the
leadership is setting up even more repressive state security services to
monitor and control the population and curb any dissidence.So there is nothing really in the aims and policy proposals agreed by
the Chinese political elite that changes the nature of Chinese
economic, social and political model. The majority in the leadership
will continue with an economic model that is dominated by state
corporations directed at all levels by the Communist cadres. Markets
will not rule and the law of value will not dominate prices, labour
incomes or domestic trade. Of course, the law of value does operate in
China but mainly through foreign trade, capital flows (investment) and
currency movements, but even here, it is under strict limits, with only
gradual moves to relax those limits. So, in my view, all the talk of
the Third Plenum leading to a fully fledged capitalist China over the
next decade is nonsense. There is no sign that the majority of the
Chinese elite wish to develop such a capitalist economy, partly because
they are doing very nicely out of the current model.Can the elite continue with this ‘halfway house’ without provoking
either a crisis and slump that will force them to follow the ‘capitalist
road’ as the World Bank and the pro-capitalist elements want? Will the
elite face an eruption from below as the fast-growing working class
urban population starts to flex its muscles for a say in running
society? Well, I think not – at least not yet. China will continue to
grow at 7-9% in annual real GDP terms for at least another decade. The
working population is still growing, although it will soon peak; there
are still hundreds of millions of rural workers and peasants to be
incorporated into the industrial machine; and China is increasingly
sucking up as much the world’s raw materials as it needs to sustain its
expansion.John Ross of Shanghai University has pointed out that China’s industrial growth remains truly staggering (http://ablog.typepad.com/keytrendsinglobalisation/2013/09/china-has-overtaken-the-us.html). “On
World Bank data China’s industrial production in 2007 was only 60% of
the US level, whereas by 2011 it was 121%. Therefore in only a six year
period China has moved from its industrial production being less than
two thirds of the US to overtaking the US by a substantial margin. … In
six years China’s industrial output almost doubled while industrial
production in the US, Europe and Japan has not even regained pre-crisis
levels.”The great Chinese economic ‘miracle’ is not exhausted quite yet.